Awards and settlements are routinely provided for a variety of reasons. For example, a person could receive compensatory and punitive damage payments for personal injury, discrimination or harassment. Some of this money is taxed by the federal government, and perhaps state governments. Hopefully, you’ll never need to know how payments for personal injuries are taxed. […]
Read More How are court awards and out-of-court settlements taxed?In response to pressure from Congress, 1,200 IRS employees have been dispatched to sort and process millions of outstanding 2020 amended paper tax returns. IRS Commissioner Chuck Rettig says a separate team will tackle 2021 paper returns as they come in. The backlog has been caused, in part, because the IRS suspended approximately 35 million […]
Read More Tax NewsThe Congressional Budget Office has estimated that the federal budget deficit for the first four months of fiscal year 2022 was $259 billion. This number is about one-third of the deficit recorded during the same period in 2021 ($736 billion). Tax revenues totaled $1.5 trillion, an increase of 28% compared to 2021. Individual income and […]
Read More Federal Budget DeficitFrom our friends at the Tax Foundation, take a look at; State Individual Income Tax Rates and Brackets for 2022 https://bit.ly/3BWCL1D
Read MoreThe qualified opportunity zone (QOZ) program allows investors who recognize capital gains to reinvest those gains in Qualified Opportunity Funds (QOFs) that, in turn, invest in QOZs throughout the United States. The Treasury Inspector General for Tax Administration (TIGTA) has issued a report that, among other things, assesses IRS processes to ensure that taxpayers that […]
Read More Qualified Opportunity ZoneSpouses who file joint federal tax returns are both generally liable for the tax owed. But joint filers may seek “innocent spouse” relief. One taxpayer requested relief for multiple years of underpaid taxes. A U.S. Court of Appeals found that the U.S. Tax Court properly denied her relief claim. She had tacitly consented to filing […]
Read More Tax NewsIf you’re married, you may wonder whether you should file joint or separate tax returns. The answer depends on your individual tax situation. In general, it depends on which filing status results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly […]
Read More Married couples filing separate tax returns: Why would they do it?Republican Senators seek tax filing season relief. Ranking Republican on the Senate Finance Committee Mike Crapo (R-ID) and 29 GOP colleagues asked the Treasury Dept. and IRS in a letter for “targeted temporary relief” for taxpayers. “While recognizing the challenges the IRS currently operates under, we find the current situation at the IRS alarming,” the […]
Read More Tax NewsThe IRS recently announced the release of its 2022 Household Employer’s Tax Guide, highlighting several changes. You need to withhold and pay Social Security and Medicare taxes if cash wages of $2,400 or more are paid in 2022 to any one household worker (up from $2,300 in 2021). You don’t count wages paid to a […]
Read More 2022 – 02/15Do you want to withdraw cash from your closely held corporation at a minimum tax cost? The simplest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient since it’s taxable to you to the extent of your corporation’s “earnings and profits.” It’s also not deductible by the corporation. Five alternatives […]
Read More Making withdrawals from your closely held corporation that aren’t taxed as dividends
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